What is a prospective buyer to do? Last week in my market update, I forecast a continued strong sellers' real estate market here along the Crystal Coast. Mortgage rates have been rising steadily for over a year. Both of these problems can be solved by the well-qualified buyer but there is one problem facing buyers that buyers cannot solve, no matter their credit score or their financial well being. That problem is lack of inventory. There is simply nothing to buy. Hi, this is Denis Raczkowski, the baker broker with the Crystal Coast Realty Group here with a short article to explain the shortage of homes available along the Crystal Coast. If you are a frustrated buyer, this video is for you. And, you potential sellers, you should pay attention, too. The housing inventory along the Crystal Coast, the number of homes on the market, fell from a high of 13,000 to a low of under 5,000 in a matter of days, thanks to Hurricane Florence which ravaged the Crystal Coast in early September, 2018. And this inventory was hammered again by COVID 19 and it continues to remain low for a variety of reasons as this article will show.
The economy of real estate is both simple and complex. Simply put, like other commodities, supply and demand drives the cost within the housing market and right now home costs are at a record high. But the factors creating low-inventory and a surge in buyer interest are complicated. First, we must recognize that real estate is local. What applies in California may have no bearing on the market in North Carolina. And the market in Charlotte, NC may have no bearing on the market along the Crystal Coast.
That being said, here are some of the varied reasons behind the historically low housing inventory here along the Crystal Coast specifically and North Carolina in general. First, all of North Carolina is viewed as an inbound state. Over 60% of the people who move into North Carolina annually stay here permanently. My wife and I are among them. Second, thousands of homeowners in North Carolina have mortgage rates locked in at historically low rates. The homeowners are reluctant to sell and buy a new home with a higher mortgage rate. Take, for example, a couple with three children. They purchased a three-bedroom home back in 2020 right before the pandemic. They got a great price under $400,000 and a great rate, under 3%. Three years later, both husband and wife work from home and they need additional bedrooms. If they want to find a bigger home, prices will be about $700,000 and mortgage rates will be north of 7%. No matter what they put down, the monthly mortgage payment is going to increase, and the family decides to make do with what they have. And this discussion is happening everywhere in North Carolina.
Third, we have had an explosion of institutional investors, think universities and churches, looking to invest excess cash. The stock market has been a disappointment so taking advantage of low interest rates, investors have purchased 24% of all single family homes, up from 15% just a year ago and they own 25% of all apartment complexes, too. Fourth, fewer new homes are being built. Less land is available. And consider that while Carteret county is one of the largest in the state, 60% of the county is water. That is one reason. But the COVID pandemic ignored by Donald Trump disrupted supply chains severely and these supply chains have not recovered to this day and this has impacted virtually all construction projects. And nearly every builder cannot find enough skilled craftsmen to meet demand. I remember a time when our general contractor stayed on the job site while masons laid all the bricks on our home. I asked why and he said, if I leave the job site, another contractor is going to come by and steal my masons. And this was in the late 1990s. And, if that wasn’t enough to keep builders from putting hammer to nail, consider this: the builder has to buy the land. The builder has to pay for surveys, plats, roads, curb and gutter. The builder has to pay for supplies. Pay the workers. And construct the house up from the ground. The builder is taking all the risk and the builder will not see any return on investment until the first house is sold and most builders/developers don’t see any profit until at least 90% of the lots and homes have been sold.
A fifth reason, I touched on briefly above, is remote working. Many people were given the option to work anywhere so long as they had access to fast internet. Really? You mean I can live at the coast and still clock my 40 hours? More space for my family in a less expensive neighborhoods, a yard for the dog, great schools for the kids, and minutes from the ocean, sounds and lakes for all my toys? Sign me up! Many employees from the Research Triangle did just that and that is yet another reason why so few homes are currently on the market along the Crystal Coast. A sixth reason is that older Americans have decided to age in place. That is a particularly popular decision among residents in North Carolina, generally, and along the Crystal Coast, specifically. Older residents have decided the grass is not greener on the other side of the fence. Who needs Florida with its ungodly high heat and humidity 9 months out of the year or Del Webb and The Villages with all their HOAs, insane rules and right-wing politics.
The six reasons I raise in this article do not have easy solutions. It's not much to hang a hat on but the real estate industry drives the American economy, and we have another major election upcoming in November 2024. Perhaps people with the power to make decisions will do the right thing to make housing more affordable and available to all Americans. We can hope. In the meanwhile, every home buying journey begins with a first step and your first step should be to contact me by clicking on the Home Buying Link. Click on this newsletter link to subscribe to my newsletter. Or, sign up for my blog on my website, www.EIHomesforSale.com, and subscribe to Emerald Isle Vacation Home Specialist on Facebook and YouTube. Thanks for reading!
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